Continuum Prepares to Climb More Mountains

Continuum Managed Services will grow 20 to 30 percent in 2013. Faster growth is expected in 2014. How will CEO Michael George and the Continuum team drive that growth? MSPmentor gets answers.

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At Continuum Managed Services' headquarters in Boston, conference rooms are named after mountains -- Really Big Mountains. Apparently, CEO Michael George likes to ascend some of the world's tallest challenges. That's fitting, considering the past, present and future opportunities facing Continuum and its MSP partners.

Continuum, which has roughly 700 employees, expects to grow about 20 percent to 30 percent this year. The growth is all organic, though Continuum is poking around the market for potential acquisitions. Looking ahead to 2014, George expects the company to grow about 40 percent while helping to empower "the most profitble, the most successful MSPs in the business."

Re-Birth of a Business

Continuum is backed by Summit Partners, a private equity firm that acquired the company in September 2011. Since that time, Continuum has overhauled its core platforms -- including RMM (remote monitoring and management), NOC (network operations center), help desk services and more. The company has also invested heavily in enterprise-class talent to service and support MSPs.

During most of 2012, Continuum was busy stabilizing its platforms, listening to partners and striving to achive predictable upgrade cycles. This year has been more about growth -- both for Continuum and its MSP base.

"Overall we've had good growth in a quiet way," George told MSPmentor in September. "We're still on the convergence path" which involves VARs, office equipment pros and telecom experts moving into the MSP space. He points to Konica Minolta's buyout of All Covered in 2011 as a key deal that paved the way for recent industry convergence.

M&A Showdowns

Now, the convergence has spread into the MSP software market itself. A few examples:

"We've picked up a fair number of people out of the Kaseya, LabTech and N-able worlds," George said. At the same time, George conceded he's "disappointed" that Continuum hasn't made any of its own technology acquisitions. The company has a full-time staff focused on potential M&A targets. But Continuum won't buy companies just for the sake of making a deal. "We have to be mindful of our [MSP] base and their core needs, and we'll always investigate whether it's wisest to partner, build or acquire."

While Continuum marches forward with MSPs, George predicts rivals will "go up market" -- focusing most of their efforts on enterprise customers rather than remaining loyal to the core MSP industry. "I have lots of confidence in the MSP's ability to pivot in this new cloud world. And you'll see MSPs remain loyal to us as they pivot."

What will drive that loyalty? The potential answer comes from Dee Zepf, VP of product management and technical services: Continuum's net promoter scores have climbed dramatically over the past two years... and it keeps climbing. Zepf says Continuum has bolstered its NOC services and overall data center performance. The company has also pumped sales leads out to MSPs, which inspires more loyalty, Continuum asserts.

More Talent

Continuum has also continued to make strategic hires. The first wave came in late 2011, when George and his management team took over the company's operations. By 2012, new team members like Rob Autor and Mark Zahar enhanced global service delivery and channel programs, respectively.

The most recent recruits include CTO Paiman Nodoushani and CMO Jeanne Hopkins. Nodoushani is an Avaya and Cisco veteran; Hopkins is a Hubspot veteran. Both should bring additional enterprise-class leadership to the company. As Continuum charges some new courses from expansion, some well-known team members have also exited -- including former VP of Marketing Steve Ricketts.

Exit Strategy?

Summit Partners has owned Continuum for two years. At some point, it's a safe bet the investors will want to exit the investment -- either through IPO (initial public offering) or by outright selling the firm to another suitor.

George says the Summit Partners-Continuum relationship is a long-term engagement. The typical Summit Partners investment involves a three- to five-year path toward IPO, and then Summit typically maintains a stake in the public company for another two years or so, George stated. It's conceivable Continuum could go public next year -- if the company executes as planned and the IPO market remains strong, George said.

Still, Continuum isn't going to rush toward potential IPO opportunities. Instead, the company wants to continue its healthy growth track record. So what's next? Here's the key clue: Roughly 94 percent of Continuum's revenues are from North America. "Our next move is obvious," he said.

My reading? Continuum is preparing to go global, with a few key countries on its international target list. The company is present at Autotask Community Live Europe this week in Barcelona. It's also a safe bet that Continuum will make an acquisition -- if the target and valuation are ideal.

Remember That?

As Continuum charts a path forward, fewer and fewer folks dwell on the company's deeply challenging start. Continuum's original technology and NOC offering were built by Zenith Infotech. Summit Partners acquired that intellectual property and rebranded it as Continuum right around the time that Zenith Infotech defaulted on a bond payment in 2011.

George always assured MSPs that Continuum was free and clear of Zenith Infotech's debt default. History proved him right. Fast forward to the present, and Continuum can now focus on climbing new mountains, with a steady stream of MSPs following the company's lead.

Discuss this Article 7

Anonymous (not verified)

on Oct 17, 2013

I don't see how this is possible. A year ago Continuum was completely flat and only made a profit by cutting costs. They were a 29MM company a year ago and there plan was to turn it into a 500MM company before going IPO. I highly doubt they will see that kind of growth in two years.

Hi Anonymous: We welcome tipsters but I'm not convinced your math is on the mark. I believe Continuum has had 500 to 600+ employees (very rough estimates) ever since the 2011 spin-off. At that employment level, your $29M revenue estimate sounds significantly low to me. Also, plenty of companies launch IPOs at $100M or so in annual revenues -- rather than pursue $500M or $1B and beyond pre-IPO. I don't have Continuum's actual numbers, but the ones you shared don't sound like they're in the ballpark, in my opinion.
-jp

Anonymous is almost correct. As a former partner, I was told Zenith had about $30M annual revenue from managed services. I can't imagine that number has grown with the commodity state of managed services.

What I think everyone is missing here is that Continuum doesn't provide ONLY an RMM solution. They have revenue coming in from their Vault BDR solution, MDM, NOC services, and their Help Desk. I don't see how adding core solutions like these is cutting costs. Especially with their Help Desk, they have close to 50 technicians now when they started with around 20 after the split from Zenith.